Why the U.S. Auto Industry has lost to Japan.Again.

[KlatooBNikto]

The end days are nearing for Detroit and this may be as good a time as any to ask ourselves why this has happened to the most vaunted segment of our economy.The death of the automotive industry will be an even greater psychological blow to our pride than Vietnam,in my opinion.

First the human reasons.The hubris of our automotive barons was the first cause,eerily similar to the hubris we see in the battlefields.The brass at GM, Ford and Chrysler thought they were invincible and dismissed the Japanese as insignificant.Part of this was racial and part the fact the Japanese believed in doing things methodically with patience and perseverance instead of flashy displays loaded with money. At each and every crucial turning point,as in the late 70's when the writing was on the wall, GM invested a whopping 5 billion dollars on Saturn whose prospects for survival do not look good. It was a showcase of automation bristling with robots.That was designed more to deter the Japanese than to actually make a profit.It shows.GM's belief in the power of money over everything ultimately did it in.The men who run GM today are inheritors of the same mindset. To them learning a new technology, investing intelligently and persevering through the learning curve are nuisances.The idea of technology being the heart and soul of their business was anathema to them.In fact, by avoiding learning about their own business and how to improve their products, they have written their own death sentences better than any competitor could.When things turned good at different times, they couldn't bother to invest in their own business but seek out other businesses like Chrysler buying up Gulfstream.The lack of humility contributed to the lack of learning which contributed to inattention to improving their products.The same lack of humility also resulted in the customers being treated as annoyances to be dealt with legally rather than their complaints attended to professionally.

The second cause would be their business practices.The Business Models favored by GM and Ford was the one pioneered by the likes of Wilson, Henry Ford and Sloan. Build an assembly line with standardized parts and crank out millions of cookie cutter cars with no variations.If you wanted a different body style with different engines or transmissions, build another assembly line to take care of that.Thus were born Chevrolet,Pontiac, Buick,Olds and Cadillac at GM and Ford, Mercury and Lincoln at Ford.Massive changes between nameplates were shunned because that cost investment in tooling.This is why the difference between one model and another was nothing more than simple changes in chrome and hood ornament.Contrast this with the philosophy developed by Soichiro Honda.He believed in being able to build several different models on the same assembly line such as the Honda Civic and Honda Accord at the Marysville,Ohio plant.That not only minimized investment but forced Honda's engineers to develop
common tooling for the models and the parts vendors to adopt just-in-time delivery to the assembly line.This total revamping of the concept of assembly line production must rank with Henry Ford' own concept in its importance. Yet, our big wheels in Detroit did not recognize the magnitude of the seismic change they were facing and continued to do business the old way.

One consequence of this attitude was that GM and Ford could only do business if the demand for their products remained strong and the break even volumes for all their products was high. That made introduction of any new models a big gamble.Honda and Toyota on the other hand became nimble with their agile manufacturing techniques and could introduce new models in fast sequences attracting customers.

The major fumble for the US auto industry was in becoming perceived as the stodgy old companies unable to adapt to changes and letting its products lag in technology and quality.When they lost that perception battle in the mid 90's the game was over except for the fat lady's singing.For the past few years, GM and Ford have been on borrowed time surviving on the big gas guzzle trucks and SUV's with their cars essentially serving as loss leaders.

Even that has now come to a halt, thanks to Bush and his splendid wars.With gasoline now reaching $2.50 a gallon and threatening to break the $3 barrier soon, we might as well say good bye to GM and Ford's profits.

These are sorry times for many of my friends in relatives in Michigan.
Our faith in these corporate mismanagers, like our faith in our political mismamagers, has blown back in our face.

[candy331]

1. Can the US allow these major US iconic industries to collapse

I would think that a govt bailout would be of the utmost necessity even more so than bailouts for the Airline industry and the Federal S& L banks.

[KlatooBNikto]

2. I think we should but extract a commitment from the industry that their

ways of doing business and the cars they produce will be different.We should also insist that the people or their reps will have a majority on the governing board.We shoud also insist that corporate officers's pay will be tied to their performance.

[Redstone]

3. "Major US iconic industries?"

How American are they?

Look up the stats on what percentage of Big Three cars are actually assembled in the US, not to even mention parts content.

Then, look up the percentage of cars that Honda and Toyota sell in the US that are made in the US. You can even include parts content in that one as well.

Then decide which companies are more "US Industries."

Redstone

[Massacure]

6. The U.S. doesn't have the cash to do it.

The airline industry bailout was a big flop and now we are eight trillion dollars in debt.

[Tux]

4. Sad times

My dad retired from GM and so did some of our family friends. I wish them the best especially the younger employees.

I think this is needed as to get rid of SUVs and trucks since most of the time, they're used in the burbs more than anything. Also, if the Japanese can make good cars and sell them cheaply, American companies will have to compete. Especially with hybrids which we need to churn out more than SUVs.

I hope they get it together before they collapse.

[Lydia Leftcoast]

5. Not only that...

Guess who sold the first hybrid car in the U.S.

Not GM, that's for sure.

From what I hear, the wait for a Prius is six months in some areas.

[unkachuck]

7. I hate to be overly cynical....

....but maybe going broke is GM and Fords grand strategy....you know, run the company into the ground, go bankrupt, bust the Union, and then pop up as something else without high wages, benefits or pension obligations....

[leesa]

8. America builds shit, what can you say?